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Turkey's Forex Sales to BOTAS Hit Record as Energy Surges

ISTANBUL, March 7 (Reuters) - Turkey's energy importer BOTAS and other state entities bought a record $5.37 billion in foreign currency from the central bank in February, according to data reflecting fallout from a domestic currency crisis and the conflict in Ukraine.

Due to soaring energy prices, total forex sales primarily to BOTAS have climbed by about $1 billion per month to total $15.1 billion in the last four months.

In November - before the lira took a dramatic dive, jacking up import prices - the sales were only $2.23 billion.

The central bank has been selling forex to BOTAS since 2014 but has seen its reserves sharply depleted since 2019 when it rolled out currency interventions, a policy that it restarted in December to quell the currency crash.

Turkey imports almost all its energy needs, leaving it vulnerable to big swings. Its energy costs started rising in September and surged 212% year-on-year in the first two months of 2022 to $16.8 billion, according to government data.

The outlook was clouded further on Monday when crude oil prices surged some 10% on the risk of a U.S. and European ban on Russian products over Moscow's invasion of Ukraine, and also due to delays in Iranian talks.

In November, Reuters reported that BOTAS - the central bank's largest buyer by far - was expected to turn to the bank to meet its growing forex needs as gas prices and demand climbed during the winter months.

Exacerbating the energy costs, the lira tumbled 44% against the dollar last year after the central bank slashed its policy rate by 500 basis points since September under an unorthodox policy sought by President Tayyip Erdogan.

After two months of stability, the lira weakened again in the last two weeks due to concerns about Russia's invasion and the resulting surge in global energy prices.

The currency was at 14.3050 against the dollar on Monday. It hit a record low of 18.4 in December before authorities unveiled the interventions and a deposit-protection scheme.

The central bank's net international reserves fell to $18.19 billion as of Feb. 25 from $19.8 billion a week earlier.

Additional reporting by Nevzat Devranoglu and Can Sezer; Writing by Daren Butler; Editing by Jonathan Spicer

Source: Reuters

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